What is a financial incentive? Simply put, it’s a way of encouraging your employees to work harder by offering them something of monetary value. It’s a classic workplace reward system whereby your employees are rewarded for their hard work.
Why might you want to introduce financial incentives to your organization? Again, it’s very simple! Employees who are financially rewarded are more likely to be satisfied. In turn, this means they’re likely to stick around for longer, so your employee retention rates go up. Ironically this can help you save money because you’re spending less on recruitment and onboarding. Having a highly satisfied team that sticks together can also improve work output and productivity, leading to further business benefits.
Overall, you should consider introducing financial incentives for your employees – but what do they look like? To help you out, we’ve listed a few of the best ways you can use money to incentivize your workers:
Handing out bonuses for a job well done is an easy way to encourage employees to work harder. People love to feel like their work is being recognized, and nothing says “well done” quite like a cheeky bonus. There are a couple of ways you can hand out bonuses, but both revolve around the idea of reaching targets. Make it known that your employees can earn more money if they hit specific targets, and then decide on the timeframe for these targets:
- Yearly business goals
- Monthly business goals
Most companies that dish out bonuses will do so at the end of the year. Workers have met a yearly sales quota or bypassed certain key targets, so they all end the year with a tasty Christmas bonus.
Alternatively, you set monthly quotas and see if your employees hit them. If they do, you give them a little bonus with their monthly wage packet. It’s a toss-up between giving smaller bonuses or one large bonus at the end of the year. Perhaps the best approach is to ask your employees what they would prefer and then implement that.
A bonus is a small chunk of money added to someone’s wages for a job well done. It can vary in size, and there’s also no guarantee that a bonus will always be handed out. On the other hand, a raise is like a bonus – only permanent. You reward hardworking employees with a salary increase, which stays in place until any future salary increases are applied.
Again, there are different ways to approach raises, but they should be a fundamental part of your employee management plan. People will not stick around for a long time if they’re constantly being paid the same. Companies will benefit from adopting these two approaches:
- Offer salary raises for exceptional work performances
- Provide a guaranteed salary boost after a set period of time
In the first instance, you can give employees a raise if they constantly go above and beyond what’s expected of them. When someone keeps ticking boxes and smashing through goals, they deserve a permanent salary boost. Other workers see this and it encourages them to follow suit.
Then, to retain your employees, offer a mandatory salary increase after they’ve been with you for a few years. Perhaps after two years, they get a small salary boost, and then after 5 years, they get even more money. This incentivizes people to keep working for you as they know they’ll start earning more money.
Last but not least, you should reward your employees with a fantastic retirement plan. Implement some sort of pension program that lets your workers save money for years to come. Employees need pensions, so this is a huge incentive to get people to a) join your company, and b) stick around for the long haul.
There are so many retirement plan ideas you can introduce, but the concept of a self-managed super fund is extremely popular. One of the benefits of a SMSF is that you give each employee control over how they save money. It gets put into a fund that’s then invested, but each worker can choose how to invest their money. As a result, there’s a chance they can make greater gains.
Explore other pension ideas as well – again, it’s smart to pool a few concepts together and then talk it over with your employees. Getting their feedback will help you choose an idea that most people prefer.
In truth, we could list many other financial incentives that boost employee satisfaction. The three above are the most common – and the most rewarding for your workers. You should start implementing them if you want people to work hard for your business while staying at your company for as long as possible.